Turnaround group flies under the radar to pick up bargains

Turnaround group flies under the radar to pick up bargains

Quietly going about its business, Retail Ecommerce Ventures is a Florida-based vehicle designed to hunt out bargains that need the addition of a little ‘sparkle’.

Set up by former NASA scientist Alex Mehr and Internet sensation Tai Lopez, the company has been looking out for big high street names that have lost their way.

The ethos is simple; find tired bricks-and-mortar brands that everyone knows and flip them into an eCommerce trading model capitalizing on Intellectual Property that has often been built up over many years.

It’s a model that has worked well as Mehr and Lopez showed with the acquisition of Dressbarn in November 2019.

This resulted in a brand new website that successfully transformed the fortunes of the brand and saw sales increase 165 per cent in the second quarter with forecasted annual sales of approximately $65 million.

Creating opportunity in difficult times

According to the U.S. National Retail Federation, in January one in four jobs were retail dependent however the advent of COVID has radically altered the picture.

Figures from the U.S. Bureau of Labor Statistics show that by June around 1.9m store-based employees were categorized as unemployed, whether that be redundant or temporarily laid off.

For many retailers, the COVID-19 crisis has been the last straw and recent months have seen a slew of companies descending into administration and bankruptcy.

The normal state of affairs is that names that are known and loved would slip into history but as Lopez points out there is always a chance for survival, “COVID-19 hit and it really created an opportunity to buy really good brands that we felt had just been victim to the times but could be brought online, like Pier 1”.

Developing lean and agile companies

The internet is, of course, a natural home for Tai Lopez whose business and lifestyle focused YouTube channel boasts some 1.32m subscribers but Mehr also has an online pedigree in that he founded, ran and sold dating platform Zoosk.

It’s this online-focused leaning process that uncovers the value of a brand.

Investment specialists like REV take businesses that had become bloated and stale and radically reimagine them.

Using an agile mixture of drop-shipping and direct-to-consumer delivery means that Dressbarn can keep the workforce small and focused.

Shayan Zadeh, CEO of Dressbarn and former co-founder of Zoosk with Mehr says “We are lean and leveraging tech to do something that would have taken hundreds of people to run”.

It’s worth noting that when it went into liquidation Dressbarn had over 9,000 employees but now runs a $65m company with just 30 people.

Instant brand awareness

As any entrepreneur who has started their own company will know, cutting through and building brand awareness is a process that can take a long time and cost a lot of money but this is one area that buying an established brand can make a great deal of sense.

In many cases, a business may have developed significant followings and will have large mailing lists.

Intellectual property can become the single biggest asset in a fire sale with branding, logos, websites and even straplines all becoming valuable properties in their own right.

Brands that consumers have grown up with are often thought of fondly and whilst the internet may have changed their customer’s buying habits over the years, the companies behind the brands haven’t moved with them.

This is where a positive brand identity proves to be an excellent shortcut to success, after all why spend years and millions of dollars developing consumer awareness when you can just buy it?

It’s not just bricks-and-mortar businesses that can lose their way and if a company has developed an online brand that simply needs a shift then investors like REV can add value.

Alex Mehr calls this a ‘hybrid model’ and says “What we’re doing is the same thing as internet startups with one major difference — instead of building a startup, we could just buy a massive brand with a built-in customer base and brand affinity and awareness and jumpstart it”.

Don’t dismiss a ‘dog’

Many years ago the Boston Consulting Group produced their ubiquitous product matrix that categorised both products and brands according to their characteristics.

It is easy to slot struggling brands into the ‘dog’ section but this could be an oversimplification.

Often, businesses just need an injection of impetus and new thinking to revitalise their outlook.

We’ve seen that moving from a traditional retail model to an online focus can change the way a business performs.

It’s true also to say that many companies are simply weighed down with historic debt and taking on the IP assets without the millstone of debt can in itself be incredibly liberating.

Turning around businesses isn’t a new phenomenon but what has changed over the last few years is that it is now possible to take a company and completely change the way it operates within a matter of months.

The important take away has to be that investors need to look below the surface and find a way to separate the good from the bad when looking at buying a brand.

Updated September 13, 2020

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